You’ve probably heard all the importance of bookkeeping. Well, I’m going to share with you 5 dire consequences of bad bookkeeping.
1. You don't know how your business is doing.
How does it feel when you have no clue about your business? You wonder why the expenses are doubled when you are in an off-peak season. You are not sure if you have enough cash to pay the taxman.
You just got a big cheque deposited the other day, now your account balance is running low again.
This feels horrible.
2. You can't make proactive business decisions.
How can you work out a pricing when you have no idea how much it will cost you? Is it worth it? Can I make profits out of this project? After all, you want to make money, don’t you?
3. You overpay taxes.
You usually see things like ‘uncategorized assets’ or ‘undeposited funds’ in bad bookkeeping. If your expenses aren’t categorized correctly, you will overpay taxes. It’s even worse when your bookkeeping is inaccurate and incomplete because you don’t know that you are overpaying taxes.
4. You can't catch errors.
Sometimes, you might encounter duplicate transactions or missing transactions due to human error or banking system error.
5. You can't manage cash flow.
You have no idea when your clients are going to pay you. And you have no idea how much money you owe your suppliers. You keep using your credit card or putting your own savings to the business. But you feel like your money falls into a black hole.
When you just started out in business, hiring a good bookkeeper is actually a good investment. Although bookkeepers don’t bring in sales for your business, they can help you to only pay a fair share of taxes by recording all the legitimate expenses. They provide you good data to make wise decisions. They maintain real time information of your business, so you can analyze trends and remain competitive in the market.
So, find a good bookkeeper, not just any bookkeeper.